Bankrupt crypto lender Voyager Digital Ltd. agreed to consider higher offers than the $1.4 billion bid it accepted from FTX US, the digital-asset exchange founded by billionaire Sam Bankman-Fried, a decision that could increase payouts to customers who had their accounts frozen.
(Bloomberg) — Bankrupt crypto lender Voyager Digital Ltd. agreed to consider higher offers than the $1.4 billion bid it accepted from FTX US, the digital-asset exchange founded by billionaire Sam Bankman-Fried, a decision that could increase payouts to customers who had their accounts frozen.
Under an arrangement approved by US Bankruptcy Judge Michael E. Wiles on Wednesday, the company can cancel its deal with FTX should it get a higher offer. The sale can’t close until Wiles approves Voyager’s bankruptcy payout plan, which the Manhattan-based judge may consider in December.
FTX won a two week-long auction for Voyager under a deal tied to court approval of the creditor payment plan, lawyers said during a court hearing held by telephone. Wiles pressed Voyager to include a standard bankruptcy clause called a “fiduciary out,” which allows a company under court protection to consider higher offers until a sale is final.
FTX is currently “the only viable alternative” for the company, Voyager bankruptcy attorney Christine Okike told Wiles. The company agreed to change how the fiduciary out is worded to ensure a better offer can be considered.
One losing bidder, crytpo exchange CrossTower, will continue to press its offer, which it believes is better than FTX’s bid, CrossTower lawyer John Ashmead told Wiles during the hearing.
“CrossTower will continue to drive towards a transaction that maximizes value for Voyager’s customers,” the company said in an emailed statement. “We believe in the cryptocurrency industry.”
Voyager declined to comment on CrossTower’s continued interest.
Wiles warned any potential bidders that they do not have long to top the FTX offer. In bankruptcy, even after an auction ends and the bankrupt company declares a winner, a judge can reject the deal. Such actions are very rare, however, and usually involve a clearly superior offer that is backed by creditors.
The official committee of unsecured creditors in Voyager’s case supports the company’s current payout plan, which is based on a sale to FTX. Ashmead said CrossTower will try to work with the committee.
Voyager has also asked Wiles to give it permission to send the payout plan to creditors, including crypto customers, for a vote. Should creditors vote in favor, Wiles would have the final word on whether the plan, and the proposed sale, are approved.
The sale to FTX is valued at about $1.4 billion, of which $51 million is in cash. As part of the sale, FTX would move customers on to its platform. Under the payout plan, customers who had digital currencies on Voyager’s platform can be paid in that form once FTX takes over, if FTX supports that type of currency, lawyers told Wiles.
The bankruptcy is Voyager Digital Holdings Inc., 22-10943, U.S. Bankruptcy Court for the Southern District of New York (Manhattan).
–With assistance from Yueqi Yang.
(Updates with details on CrossTower plans and hurdles for rival bids.)
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